Breaking the Trade-Off Between Efficiency & Service Analysis

E-Man 251 Marketing Breaking the Trade-Off between Efficiency & Service Analysis Frances X. Frei’s article in the November 2006 Harvard Business Review discusses ways service businesses need to deal with customer variability. Her beings with an example of a business that have their customers show room floor and how customers aren’t simply opening their wallets, they are involved in the ongoing operation of the company. Even though Ms. Frei focuses on service businesses, her article provides useful insights for libraries. The first step in managing customer variability is understanding the forms it can take.Arrival variability: This is the first and most common type of variability.

This type is when customers don’t want service all at the same time, of at times which aren’t convenient to the business, i. e. : grocery stores, call centers, or emergency rooms. The solution stated was that you require appointments or reservations, only issue with that is that in some environments, such as the emergency room, you cant make the customers make a reservation, or know when they will fall from a ladder and make a reservation to see the doctor.The resulting inefficiencies have inspired lots of solutions, including those in W. Earl Sasser’s Match Supply and Demand in Services Industries.

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I personally believe this is one of the most painful variances, considering I used to work in the fast food industry and in customer service, sometimes your service just isn’t up to par at the time in which someone is asking for it. For example: I worked for Fazoli’s in which anytime could be horrible, whether it be a bus of hungry baseball players, or a hungry family that comes 2 minutes before closing time.I personally have not figured out a way in which way to solve this problem, I just think the company needs to be prepared at all times to serve whoever, whenever, and however much they are trying to order.

Request variability: Where customers ask for things that can slow up progress of the service. She stated the example from Five Easy Pieces, where Jack Nicholson asks for a piece of toast. Customer’s requests can vary widely and that “poses real challenges for virtually every kind of service business. Capability variability: This is a less obvious variability, this is on in which it considers how much the customer knows about the service, i.

e. : a cleaning service, some ma think that the job done was well done, but others who know more about cleaning, may not think the same thing because of their previous involvement with cleaning. Effort variability: When a customer needs to be a part of the service and it’s up to your customers (not you) how much effort they put into a “service interaction. ”Subject preference variability: Not every customer has the same definition of being “treated well. ” This is the variance in which customers opinions vary.

To me this is almost like the Capability variance. She then continues on their the article and addresses Trade-offs, in which this is where the manager decides what path they will take to fix the variance and how much they want to allow the customer to have. She also has a chart giving strategies for each variance and the level of accommodation in which you, as the manager, are willing to give.Managers must choose whether to try to accommodate customer variability or reduce it. The secret to success lies in correctly diagnosing the behavioral problems, designing a mutually beneficial role for customers, and testing new approaches.

The whole article is worth reading and has examples of companies’ successes and failures, including Netflix, which has capitalized on customers’ resentment of late fees from other DVD-rental companies.



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